Technology is a must-own sector for many investors due to the increasingly large role technology plays in the life of consumers and businesses. This sector offers the possibility of outsized gains from fast growing tech companies, and once in a while, opportunities come along to buy a tech stock on the cheap. When tech stocks are growing fast and the market loves them, they can trade at very high valuations. When they stumble and the market loses interest, they can turn into real bargains. One of the best examples of this was when investors were almost giving away stocks like Priceline (PCLN) or Apple (AAPL) in the single digits, years ago. Now both of those stocks are trading for over $400!
Many investors look for bargain stocks by checking the book value of a stock. Book value is a metric used by many investors to evaluate a stock investment. It is measured by taking the total assets held by a company and subtracting the liabilities. This gives investors some basis for what the dollar value per share would be in the event of a liquidation or possible asset sales of the company.
I have researched a number of tech stock bargains and found a few that are trading below book value, and still have major turnaround and upside potential. Here are the stocks to consider:
Xerox Corporation (XRX) is a leading maker of printers, copiers, software and also provides other business solutions such as IT services. Many investors may not realize that this company is so much more than a copy machine maker. In fact, Xerox has a significant portfolio of technology assets, with about 9,400 active patents. If this company is able to monetize these patents more effectively in the future, the stock could see a turnaround and rise substantially from these low levels. Xerox shares dipped to about $6.75 in October, but have steadily been rising since. A small position in Xerox could payoff for investors over time.
Here are some key points for XRX:
Current share price: $8.10
The 52 week range is $6.55 to $11.73
Earnings estimates for 2011: $1.08 per share
Earnings estimates for 2012: $1.17 per share
Annual dividend: 17 cents per share which yields 2.1%
Book value: $9.20 per share
Research in Motion, Ltd. (RIMM) makes the popular Blackberry mobile phones and the "Playbook" tablet. This company was once the hottest smartphone maker and just like many companies, it has fallen out of favor due to competition from Apple (AAPL) and others. Apple appears to have built a "better mousetrap" for now and the stock price tells the whole story. However, RIMM owns a number of valuable patents and still has strong support from corporate and government users. The company plans to introduce a new operating system in 2012. There is increasing pressure on the board to either sell the company or bring in new leadership, so while many have lost faith in the stock, there is significant upside if the company can turn around and revive product demand.
Here are some key points for RIMM:
Current share price: $15.34
The 52 week range is $12.54 to $70.54
Earnings estimates for 2011: $4.13 per share
Earnings estimates for 2012: $2.95 per share
Annual dividend: none
Book value: $19.77 per share
Monster Worldwide, Inc. (MWW) operates a number of popular websites focused on careers, job postings and other related interests. Revenues at this company have declined due to the weak economy and job market. However, recent unemployment data shows that the job market is starting to improve, ever so slowly. There are other signs that the economy is picking up speed as well. With the stock trading for about one-third of the 52 week high and job market trends heading in the right direction, this might be a classic turn around story for patient investors.
Here are some key points for MWW:
Current share price: $8.35
The 52 week range is $6.34 to $25.10
Earnings estimates for 2011: 39 cents per share
Earnings estimates for 2012: 53 cents per share
Annual dividend: None
Book value: $9.73 per share
Corning, Inc. (GLW) is a maker of specialty glass products that is used on flat screen televisions and some of the most popular tablet computers and mobile phone devices. While Corning's specialty glass is seeing strong demand from the smart phone and tablet market, sales of televisions have been weak due to the slow down in Europe and other economies. Corning has a strong balance sheet and when the television glass market improves, this stock is poised to turn around as well. In the meanwhile, investors are paid to wait with a solid dividend yield around 2.2%.
Here are some key points for GLW:
Current share price: $13.52
The 52 week range is $11.51 to $23.43
Earnings estimates for 2011: $1.78 per share
Earnings estimates for 2012: $1.71 per share
Annual dividend: 30 cents per share which yields 2.2%
Book value: $13.79 per share
MEMC Electronic Materials, Inc. (WFR) manufactures silicon wafers for use in computers, solar, and other products. Revenues and margins have been weakened by the downturn in the global economy and particularly from soft demand in the solar industry. It's probably too early to call a rebound in the solar industry, but this stock is worth watching and it will probably turn around before the solar industry does. I would watch the next couple of quarterly reports for signs of revenue and margin stabilization or improvement.
Here are some key points for WFR:
Current share price: $3.85
The 52 week range is $3.65 to $15.04
Earnings estimates for 2011: 37 cents per share
Earnings estimates for 2012: 48 cents per share
Annual dividend: None
Book value: $9.75 per share
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
